New ways to engage customers in co-designing your company's future - a weblog to complement the book, Outside Innovation, by Patty Seybold

Description

What is Outside Innovation?

It’s when customers lead the design of your business processes, products, services, and business models. It’s when customers roll up their sleeves to co-design their products and your business. It’s when customers attract other customers to build a vital customer-centric ecosystem around your products and services.
The good news is that customer-led innovation is one of the most predictably successful innovation processes.
The bad news is that many managers and executives don’t yet believe in it. Today, that’s their loss. Ultimately, it may be their downfall.

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Observations

LEAD USERS

Eric von Hippel coined the term "lead users" to describe a group of both customers and non-customers who are passionate about getting certain things accomplished. They may not know or care about the products or services you offer. But they do care about their project or need. Lead users have already explored innovative ways to get things done. They're usually willing to share their approaches with others.

LEAD CUSTOMERS

I use the term "lead customers" to describe the small percentage of your current customers who are truly innovative. These may not be your most vocal customers, your most profitable customers, or your largest customers. But they are the customers who care deeply about the way in which your products or services could help them achieve something they care about.

LEAD CUSTOMERS AND LEAD USERS

We’ve spent the last 25 years identifying, interviewing, selecting, and grouping customers together to participate in our Customer Scenario® Mapping sessions. Over the years, we’ve learned how to identify the people who will contribute the most to a customer co-design session. These are the same kinds of people you should be recruiting when you set out to harness customer-led innovation.

HOW DO YOU WIN IN INNOVATION?

You no longer win by having the smartest engineers and scientists; you win by having the smartest customers!

CUSTOMER CO-DESIGN

In more than 25 years of business strategy consulting, we’ve found that customer co-design is a woefully under-used capability.

August 02, 2011

Why Customer Experience Shouldn’t Report to Marketing

For some time now, I’ve been conscious of the built-in “gotcha” that is diluting the impact of many customer experience initiatives. Your customer experience leader may have a well-designed customer experience and/or customer advocacy program. He or she may have “support” from your CEO. But does he or she actually have the purview to execute? Does she have the budgetary and political clout to actually design and carry out initiatives that will improve the Quality of Customer Experience your firm delivers?

Does she have purview to prioritize and to fund initiatives across interaction touchpoints, distribution channels, internal organizational silos, including IT infrastructure projects? Or does your customer experience “leader” simply gather Voice of the Customer (VOC) insights and oversee customer surveys and then report the results back to anyone who will listen?

Most customer experience executives reside in their company’s marketing organizations. They are supposed to worry about the end-to-end experience customers have when interacting with your brand. If she is really good, and well-respected, she may help drive priorities for some of the business process, policy, and/or IT improvements the company needs to make. But most of the CX leaders I’ve spoken with admit to feeling powerless, discouraged, and underwhelmed by the actual changes anyone in the company is really willing to make. “If only we could take action faster,” they lament. “It takes forever to convince people to make the changes they know we need to make.”

I hate to say it, but in most companies and industries, marketing has no clout. Marketing has a budget that it uses to maintain the Web site, do customer research, generate leads, and build brand awareness. Marketing measures its success based on leads generated, conversion rates, and the strength of the brand. The customer experience group housed within marketing measures its success based on customer loyalty scores and customer survey results, as well as how well the company ranks in various channel-specific customer experience audits.

Operations Does Have Clout! Who does have clout (and budget) in most organizations? The actual product line P&Ls, of course. They’re each responsible for generating their own revenues and profits. The sales executives within those P&Ls typically have the most clout as the premier revenue generators. Or the people who conceive of, design, develop, and deliver the firm’s products and services may have the most clout. But, besides P&L leaders, who gets to spend money and carry out major initiatives for the company as a whole?

There’s usually a company-wide, or at least region-wide, Operations group, typically headed by a Chief Operating Officer. Recently, we’ve also noticed an increase in the number of “Strategic Planning and Operations” groups within large organizations. These SP&O groups are chartered with executing on strategic intent. These Operations groups are typically led by executives with vision, clout, and budgets that are large enough to tackle company-wide initiatives and/or to sponsor pilot projects within P&Ls that may spread to other groups.

CX Execs Should Migrate to Operations If you’re a customer experience leader who feels powerless to do anything other than report the news and to try to herd your execs in a more customer-friendly direction, look for a better place to hang your hat. Check out your Operations group. See if that might be a better fit.

CX Execs Should Gain Control of OpEx Spending What’s the best way to get clout? Control the budget. Don’t ask for more money. You won’t get it. But DO ask to have the ability to PRIORITIZE up to 10% of your company’s operational expenditures across product lines, touchpoints, and functional areas. Each P&L might submit items for your consideration, or you could use the funds to sponsor customer-impacting infrastructure improvements that won’t get done any other way.

CX Execs Should Lead Customer-Impacting Business Process Redesign Efforts When you streamline customers’ critical scenarios, you discover that your customers’ processes for getting things done inevitably cross your organization’s internal and external boundaries. Who better to lead both the customer co-design and the prioritized execution of customer-adaptive business processes than you, the CX leader?

CX Execs Should Set Operational Metrics for Customer-Impacting Issues A lot of the levers that a CX executive should have include customers’ success metrics that can be translated into internal operational metrics—e.g., reduce the time and the number of steps it takes for a customer to be productive with your software, or to be enjoying driving her new car, or to be making money from her reallocated financial portfolio.

So, if you are a frustrated (or a wannabe) Customer Experience executive, or if you’re part of a company that seems to be struggling to deliver on customer experience priorities, take a closer look at what a CX executive’s role should be. Think about the role and the person assigned to it. Look at how your organizational structure helps or hinders your collective efforts to make it easy for your customers to get things done and to do business with you.

Comments

The new voice of the customer is putting a huge burden on the old ear of business. With the advent of social media, telling 10 friends can now mean influencing 10 million friends. The resulting tidal shift in the business-to-customer relationship has businesses scrambling to adjust: B2C companies are now employing new listening technologies, appointing Chief Experience Officers, and forming social media response teams.

As listening programs are developed, or social media teams are formed, I believe it's time to reconsider which department should be leading the charge. Who do you want advocating for customers based on voice-of-the-customer and Customer Experience insights or engaging on social media? Marketing -- the automatic fallback -- is not the best option. (Recently, Patricia Seybold agreed in her blog "Why Customer Experience Shouldn't Report to Marketing".)

Customer Service, on the other hand, is the right choice. Why? Because customer service has the actual connection to the customer, a departmental incentive, and the operational structure to effectively listen to the voice-of-the-customer, engage via social media, and take the insights all the way from big picture talk to implementation and measurable results.

Listening is in the DNA of Customer service.

Customer service is in the business of listening -- it's in their DNA. That's what they do -- day in and day out. The customer experience that your business is trying to capture through its listening program is actually unfolding when customers call in to the contact center or chat with agents. Service reps linking what customers are saying or requesting directly with what the business has to offer. It's voice-of-the-customer theory in practice.

Bottom line, it makes sense to extend the social listening programs to Customer service as well since they can relate to your customers -- pretty important when it comes to customer advocacy.

To Listen and Act has a direct impact on Customer Service metrics.

Customer Service people care. To find gratification in solving other people's problems all day long, you'd have to. But, to be fair, it's their job to care -- customer satisfaction is a key metric for service managers.

If customers are requesting better online self-service options, it's in the service department's interest to listen and ensure organizational follow-through.

And that's precisely why the service department is the natural launching point for listening and customer experience initiatives -- Customer Service has a vested interest in keeping customers happy and solving issues.

Customer Service also has a compelling budgetary incentive on its own behalf to act on listening insights -- like communicating actionable product features to R&D or shipping bottlenecks to the appropriate department. The service manager knows that a better product and better processes will mean fewer calls to the contact center and fewer departmental resources tapped.

Customer service has the right operational structure.

Unlike Marketing, Customer Service has all the operational service processes and metrics in place needed to scale and cost-effectively engage in social media. A bug in a product release, for instance, or change in the buying process, may impact customer service with a ten-fold increase in the number of online mentions and calls to the contact center. With hundreds of thousands, or millions of customers, this increase matters. Customer Service, not Marketing, has the right operational structure to rise to the occasion -- to deal with volumes, scale effectively, keep costs down, and follow governance/compliance rules.

Is your Marketing department tweeting about lost baggage?

Customer Experience, engaging on social media or listening may have had a faulty landing in your Marketing department. However, it's time to view social engagement with customers about their problems for what it is: an extension of customer service. Teams monitoring Twitter and Facebook for customer issues are dealing with the same problems agents in the contact center face. The overall company philosophy and policies that guide agents handling complaints via phone, email, or chat should be no different from those social media teams employ.

In the Marketing department, social listening tends to be limited to reputation management -- monitoring the social conversation for negative fallout, and responding in kind. We've all seen the PR crises unfold as disgruntled customers tweet their way to better service, getting some of the biggest brands out there to dance -- if fleetingly -- to their tune. Crisis management has its place, of course, but that just begs the question: Whom do you really want handling upset or angry customers? More importantly, why wait for a crisis to motivate change or finally fix problems with the services you provide?

There's a bigger picture yet.

The bigger picture -- and better practice -- is to incorporate social listening and engagement or customer experience programs into your overall customer service operations and service strategy. By incorporating feedback from all your customer communication and hence listening channels into Customer Service business processes, you're no longer just providing a reactive service response. You're in the proactive position of building a better business aligned with customer needs and wants.

Customer Service is the obvious favorite for dealing with customers, but it's also a natural hub for process and organizational improvement driven by customer listening and customer experience insights.

With Customer Service now less reactive because of all this listening, it means that they can have a true place at the Executive table. Customer service can measure the impact of changes to the customer experience, to help the budget better around product and business change. No longer just a cost center they can, in fact, become the hub of the business and, if aligned with the rest of the departments, can be instrumental in driving change.